A tale of 2 Rs..

With the arrival of Eid, the prices of milk shot up to Rs 34 or in some areas Rs 36. Milk is the most basic of commodities for Karachiites and specially on Eid when tea, desserts, and coffee are the order of the day, most people were forced to give in to the whim of the local milk vendors. Everyone expected that after the festivities were over, the prices would come back to normal and people would be able to breath a sigh of relief.
But that did not happen. The City Government intermediated and ordered the milk sellers to charge Rs 28/liter. But as they say in Urdu ‘Laaton k bhhot baaton se nahin maante’. Even after the police penalized and arrested some retailers, many milk shops around the city still charged Rs 34 or higher. And what have they got to say for that? ‘Yeh Pakistan hai. Koi faraq nahin parta.’ Goes to say a lot abut our law implementing authorities.
Nevertheless, the price has come down to Rs 30 for most of the city.
But didn’t the government fix the prices at 28?

31 Comments so far

  1. d0ct0r (unregistered) on January 9th, 2007 @ 10:26 pm

    credit goes to this government for creating many cartels to fleece the public, be it sugar cartel,cement cartel,automobile cartel,Milk cartel(nestle/haleeb/engro/and gawalas )

    forcing these gawalas to sell milk at Rs28/30 won’t work in long term… and maybe they’ll go on strike in coming days.. simple solution that comes to my mind is letting duty free import of quality milk powder from European and Australian manufacturers on which currently heavy duty and taxes are charged.. milk is not some luxry item like automobiles , its a necessity , and to safeguard the interest of public government to withdraw heavy duties… but sadly government only listens to local dairy cartel ,thanx to them heavy duty has been imposed on imports and now they’re fleecing consumers…


  2. Sufi (unregistered) on January 9th, 2007 @ 11:17 pm

    In any market of the world, price is determined by the demand. there are simple rules. if someone thinks that milk is expensive, they shouldn’t buy it and when a big number of people stop buying milk, there will be a decline in demand and and hence the price will automatically adjust to a lower price. Price caps by governments do more harm than good. Please stop blaming the government for every other thing.
    If an agricultural country cannot produce enough milk for its own needs, then its really alarming. Its high time.. Governments don’t make cartels. Big corporations do, and even in a cartel firms are insecure about each other. The problem is our people. They just don’t stop buying. You increase the price of petrol cement or whatever, and there is no change in the demand. Its weird. At times I feel that our economy is very different from the rest of the world, as it rarely reacts to a price change.

    The only solution that I see is completely shunning the high priced vendors and buying only from the lower priced vendors, but then they won’t have such big capacity to sell and we don’t trust everyone other doodhwala in the city, we have trusted men who deliver milk at our houses.. so its a paradox. live with it :(


  3. KhiTorPit (unregistered) on January 9th, 2007 @ 11:19 pm

    Doctor sahab, we are already importing too many stuffs from foreign countries (rather then exporting to improve the economy) and you are suggesting to import milk also ??


  4. Sufi (unregistered) on January 9th, 2007 @ 11:19 pm

    And I am not in favor of removing the high import taxes & duties on international milk because I believe that we should AT LEAST produce our own milk.. or else kya nakara qaum hai? :(


  5. sheysrebellion (unregistered) on January 9th, 2007 @ 11:20 pm

    Price controls are bad.


  6. sheysrebellion (unregistered) on January 9th, 2007 @ 11:23 pm

    Price controls are bad.


  7. KhiTorPit (unregistered) on January 9th, 2007 @ 11:23 pm

    Sufi sahab, ppl cannot stop buying milk either, as its a necessity of life, In my opinion govt. is doing a good job … danda … thats the only lang. these ppl understands.


  8. Sufi (unregistered) on January 9th, 2007 @ 11:26 pm

    Khitorpit, that the danda continues.. and the vendors and baray walay are not making enough profit. they will divert their resources to other profitable businesses. Raha saha doodh bhi gaya :|


  9. Sufi (unregistered) on January 9th, 2007 @ 11:27 pm

    *suppose that the danda continues..


  10. d0ct0r (unregistered) on January 9th, 2007 @ 11:33 pm

    @KhiTorPit milkpowder is already being imported and had it not been imported the price of milk in local market would have touched 50 by now…(nestle is the largest importer) , am just saying that remove duties make it a duty free item and then see these cartels crumble…


  11. d0ct0r (unregistered) on January 9th, 2007 @ 11:36 pm

    mark my words .. forced price controls won’t work and this government won’t be able to do much and eventually consumers would be the one suffering in the end..


  12. Kashif (unregistered) on January 9th, 2007 @ 11:39 pm

    Nice post. I bought curd a day before eid for rs 50 per kg – haven’t any price controlling action in my neighbourhood – cdgk is all words no action, as usual


  13. d0ct0r (unregistered) on January 9th, 2007 @ 11:42 pm

    milkpowder is basically a poor man’s item… you can get 1 kg good quality milkpowder within price range of Rs200-240 and with 1Kg powder u can make around 8-10 litre of liquid milk do your own maths , that comes out to be 20-24 Rs/litre of milk…


  14. Adnan K (unregistered) on January 9th, 2007 @ 11:48 pm

    @ Sufi
    Your earlier point quoted “They just don’t stop buying. You increase the price of petrol cement or whatever, and there is no change in the demand. Its weird. At times I feel that our economy is very different from the rest of the world, as it rarely reacts to a price change.”

    I dont think this is a phenomenon being faced only by Pakistan. Here in the US the price of petrol has also flucuated to unseen heights in the last two yrs. But many economist are equally baffled because consumption has not decreased. People who drive everywhere continue to do so. Major weekends that are famous for their road traffic are still as packed and according to the AAA (Auto Assoc of America) the trend of travelling places by car is still on the increase rather than the other way around.

    Milk and other neccesities like petrol are going to remain neccesities and the inflation in prices is not really going to sag the consumption rate. What is one to do, stop feeding their chidren milk? People learn to cut corners elsewhere on some other luxuries but the requirement of food is as basic as it gets. I can bet that if we have consumption data trends to analyze in Pakistan we will see that people are cutting costs elsewhere, or in the burgeoning atmosphere of credit and financing, going deeper into dept on borrowd money.


  15. Bayl (unregistered) on January 9th, 2007 @ 11:52 pm

    @Sufi

    You just forgot one important aspect of economics: ELASTICITY!
    Milk, petrol and the likes are highly price INELASTIC and demand will not decrease substantially (people will not stop buying) as price rises. They are necessities, simple.


  16. d0ct0r (unregistered) on January 10th, 2007 @ 12:00 am

    nazim really thinks that mqm style threatening would solve every problem.. unless he is serious about solving this problem and addresses all the issues the situation would get worse…


  17. Sufi (unregistered) on January 10th, 2007 @ 12:02 am

    Bayl, I did forget abt elasticity. lol.. :|


  18. KhiTorPit (unregistered) on January 10th, 2007 @ 12:03 am

    Doctor!! I’m talking about milk and not the powdermilk, I know we do import powdermilk, and we cannot use powdermilk as an alternate to milk.
    PPl cannot stop buying milk.


  19. d0ct0r (unregistered) on January 10th, 2007 @ 12:09 am

    @KhiTorPit well lemme reveal a trade secret of local milk industry including gawalas who sell liquid milk that no one will tell you… they mix good quality imported milk powder to meet the high demand… (the milk that you’re drinking these days in milkpak/olper/haleeb is 50-60% made from imported milkpowder coz they’re not getting quality milk from local suppliers..


  20. d0ct0r (unregistered) on January 10th, 2007 @ 12:21 am

    the major factor that has agrevated milk supply to karachi and hyderabad is setting up of milk processing plant by urea gaint engro,(its a good thing for local small scale dairy farmer who in past were selling their milk to milk sellers from karachi and hyderabad at low prices but now they’re getting cash payment at their door step by engro) so naturally this factor has attributed to shortage of milk for gawalas who supply milk to both these cities…


  21. d0ct0r (unregistered) on January 10th, 2007 @ 12:26 am

    there are good quailty milkpowder out there that can be used as alternate to fresh milk… i personally have’nt bought fresh milk from gawalas for last 8 years… mostly milkpowder and at times milkpack


  22. d0ct0r (unregistered) on January 10th, 2007 @ 12:31 am

    *aggravated


  23. UnholySaint (unregistered) on January 10th, 2007 @ 6:41 am

    Bravo SUFI! This is the 1st time I have seen a reasonable argument produced on a board on the internet! And you have got reasonable responses too! Agree or disagree, I am delighted to hear very reasonable and educated opinions!

    I feel its a lack of
    1. enforced regulations on the Milk industry to preserve quality of the product
    2. Competition
    3. Lack of accountability – i.e. corruption.


  24. JayJay (unregistered) on January 10th, 2007 @ 9:31 am

    A few factors which should be considered in this debate to help us understand milk shortage and rising prices:

    • Lack of milk storage facilities (freezers, etc) at the point of production, which results in wastage (ask any Punjabi villager where the utilization of surplus milk is a problem on occasions) as the daily production has to be consumed daily;
    • Lack of safe milk transportation facilities (frigid trucks) from the point of production to the processing/selling point Рagain results in wastage, restricted delivery circles, and high mark-ups charged by the middleman РKarachi therefore cannot be supplied from Sargodha, Sahiwal or other major milk producing areas;
    • Inadequate milk processing facilities Рagain wastage results;
    • Inadequate commercialization of milk production industry. Majority of milk in produced by small scale farmers, with limited resources and technical expertise, rather than by large, professionally run, dairy farms;
    • Inadequate scientific research is conducted to augment milk production per animal as well as minimum information flow from research institutions to producers, if any research is carried out;
    • Informal marketing methods (dhoodwalas, instead of bottled milk from supermarkets) resulting in artificial pricing, lack of quality of the product and insufficient incentives for producers;

    If you think here might be more factors.

    BTW, Pakistan is the fifth largest producers of milk in the world and houses third largest number of buffaloes.


  25. AhadAustin (unregistered) on January 10th, 2007 @ 11:08 am

    Yar Sid

    In Karachi; if only for One day People don’t buy the Milk from Dood walla (Pani walla). But (abay yaar kion kerayga)

    Buy the Haleeb, Opel, or Milk pack. What ganna happend ? Who will suffer (Dood walla) ? As we are Good Nation for Boycotts lets fights local Dens First. Right !

    God helps those who help themselves.

    Think Global Act Local

    Ahad


  26. mansoor (unregistered) on January 10th, 2007 @ 11:44 am

    Personally, im in favour of packaged milk, and the only reason being that it is not largely water!

    And price controls dont work, competition does. Instead of making the market more competitive (telecom industry?) price bans make it less attractive. Many people drop out, and the remaining get monopoly over their areas/sector/niches/whatever. Let two three more distributors get up and running (like Olpers and Goodmilk) and you’ll see a whole new ball game. Another one of the problems is the ganging up of a particular industry against the consumer. E.g. Car Battery manufacturers are all producing the same low quality batteries and selling them at high prices. You have 4 brands to choose from, but theres no difference apart from the color used. All will die within a year :S The same can be seen in the packaged milk industry, where through “TetraPak” they’ve essentially ganged up on the little man.

    And i am surprised that we’re in the top 5 milk producers and YET we have no milk for ourselves.

    But as with all problems, there are opportunities for business here as well. Momekh on Lahore MB posted a few months back of starting up a milk distribution company, Keemak Milk, where he gets the milk directly from the farms, packages it, and sells to houses at very reasonable rates..


  27. MB (unregistered) on January 10th, 2007 @ 12:32 pm

    @MANSOOR

    Great, nice comment. I agree completely to what you said specially the competition point.


  28. d0ct0r (unregistered) on January 10th, 2007 @ 7:05 pm

    comparing telecom industry with dairy sector won’t be fair… mobile operators simply invest in hardware and are ready to offer services whereas with dairy sector raw material (milk) is involved which has to be painstakingly collected the processed and then delivered.. only thing that can be adopted from telecom experience is the role of regulator(PTA) which is positive and mutually beneficial for both consumer and well as the industry…


  29. ahmer (unregistered) on January 14th, 2007 @ 1:17 pm

    Look guys r going beyond the scope of reason, If the Big Corporations like Nestle and others dont force the local Dhoodh/Pani wala to up the price n dec his quality ppl arent gonna change the trend of buying Unpasteurised Milk, My Cousin told me that in ISL for the past 2 yrs there has been a campaign on the hygienicity of the Milk n ppl have changed the their preference to Brands so i guess it will take time but we all will essentially be forced to opt out n the gawwalahs will have nothing to do but sell to Corporations. Coiuld u guys shed some light on it as i m not there in Pak.


  30. Sufi (unregistered) on January 17th, 2007 @ 1:25 am

    bhai, tum log piyo dubbon ka doodh. mein to taza hi piyonn ga :P

    Packaged/processed milk in the US/EU is used widely primarily becuase it would cost a hell lot more to distribute & buy the fresh milk. Its a good naimat that you get taaza doodh so cheaply.


  31. wasiq (unregistered) on January 17th, 2007 @ 1:46 am

    abbey yaar yehan bahut serious discussion chal rahaa hai bachoun ka yahaan koi kam nahein lets go to the next post….lol



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